CH 5

Denise is the CEO of a profitable business called 4-Ever-Sun Inc. which harnesses solar power, a renewable energy source that is sustainable over time. Instead of pursuing a sustainable competitive advantage, Denise decides to focus on minimizing detrimental effects on society and the planet. This strategy is known as A) sustainable strategy. B) the balanced scorecard. C) corporate diversification strategy. D) cost leadership strategy.

A

Fresher Corp. produces electric bathroom fragrance diffusers and sells the electric outer device at a market rate price. However, they lock their clients into a two-year agreement to purchase the perfume refills solely from them on a monthly basis. Which of the following business models does this best illustrate? A) subscription-based B) peer-to-peer C) crowdsourcing D) freemium

A

From an investor's or shareholder's perspective, the measure of competitive advantage that matters most is the A) return on risk capital. B) economic value created. C) consumer surplus. D) inventory turnover.

A

The balanced-scorecard framework is a tool for strategy ________, not ________. A) implementation; formulation B) analysis; sustainability C) formulation, implementation D) sustainability, economic value creation

A

Under the ________ framework, producer surplus is important in the quest for competitive advantage because this is the profit that a firm captures when producing and selling a good or service. A) economic value creation B) accounting profitability C) shareholder value creation D) PESTEL

A

Which of the following is a disadvantage of measuring firm performance through total return to shareholders and firm market capitalization? A) Market volatility makes it difficult to assess firm performance through these measures, particularly in the short term. B) These tools fail to indicate how the stock market views all available public information about a firm's expected future performance. C) These tools measure competitive advantage in absolute terms rather than relative terms. D) Only the book value of the share prices is taken into account when applying these measures, and not the market value.

A

________ is best described as the difference between a buyer's willingness to pay for a product or service and a firm's total cost to produce it. A) Economic value created B) Break-even point C) Consumer surplus D) Cost of capital

A

Managers can justify using the balanced-scorecard framework because research show that both ________ and ________ performance dimensions are important when examining the effectiveness of a firm's strategy. A) economic, stock price B) quantitative, qualitative C) customer survey, peer evaluation D) financial, accounting

B

________ are the legal owners of public companies. A) Employees B) Shareholders C) Category captains D) Creditors

B

Economic value creation is best expressed as A) producer surplus minus consumer surplus. B) consumer surplus minus cost of production. C) consumer surplus plus firm profit. D) producer surplus plus firm profit.

C

Susan is trying to determine if her company has a competitive advantage. She must be able to accomplish two critical tasks before she can substantiate this claim. First, she must assess the performance of her company accurately; second, she must A) assess her capital and liquid position to ensure funding for future projects. B) focus on creating value by utilizing operational effectiveness such as Six Sigma and lean manufacturing. C) compare and benchmark her firm's performance to other competitors in her same industry. D) ensure the right strategic leaders are in place that can execute her strategy.

C

Under the ________ framework, the question "How do we create value?" is relevant when trying to improve innovation and organizational learning. A) triple-bottom-line B) economic value creation C) balanced scorecard D) operational effectiveness

C

The three financial ratios that constitute return on revenue are Cost of goods sold/Revenue, Research and Development expense/Revenue, and A) Accounting profitability/Revenue. B) Economic value created/Revenue. C) Total return to shareholders/Revenue. D) Selling, general, and administrative expense/Revenue.

D

________ is the benefit that is missed or given up when an investor, individual or business chooses one alternative over another. A) Value creation B) Opportunity cost C) Accounting profitability D) Reservation price

B

________ is best described as a measure of how effectively capital is being used by a firm to generate revenue. A) Return on revenue B) Risk capital C) Working capital turnover D) Revenue per employee

C

The types of assets that are the primary focus of accounting data but are no longer most important to competitive advantage are A) market brand value. B) organizational culture. C) intangible. D) tangible.

D

There are several major limitations of employing the balance scorecard framework; which of the following below is not one of those limitations? A) choosing the right metrics to use B) asking the four key questions C) the skills and abilities of the manager using the framework D) the type of marketing and HR functions used to employ the framework

D

Tom is attempting to measure how his customers views his firm. To do this, he uses the balanced-scorecard framework because he knows that A) customer surveys will help him determine future industry attractiveness. B) this will guarantee his company a sustainable competitive advantage. C) the framework will help him increase his stock price. D) the customer perspective is directly linked to firm revenues and profits.

D

Which of the following below are not one of the three dimensions that make up the Triple Bottom Line framework? A) economic value creation B) accounting profitability C) shareholder wealth creation D) None of the answers are correct.

D

Which of the following is an external performance metric? A) return on revenue B) fixed assets turnover C) inventory turnover D) total return to shareholders

D